Ninth Circuit Holds ERISA Does Not Preempt Negligent Misrepresentation Claim By Out-of-Network Medical Provider Arising From Benefits Verification Call

On August 11, 2026, the US Court of Appeals for the Ninth Circuit addressed whether the Employee Retirement Income Security Act of 1974 (“ERISA”) preempted California state law claims brought by an out-of-network medical provider against the sponsor of an ERISA-governed health plan and its administrator. In Healthcare Ally Management of California, LLC v. WSP USA, Inc., No. 24-3479 (9th Cir. Aug. 11, 2026) (“HAMOC”), a Ninth Circuit panel held that ERISA did not preempt—and therefore did not require dismissal of—a negligent misrepresentation claim arising from the plan administrator’s alleged misrepresentations to an out-of-network medical provider inquiring about the plan’s coverage rate for a patient’s upcoming surgery. The decision aligns the Ninth Circuit with the Fifth, Eighth, and Eleventh Circuits in holding that ERISA does not preempt state law negligent misrepresentation claims based on benefits verification calls.¹ HAMOC goes beyond those decisions, however, holding that ERISA does not preempt state law claims based on alleged misrepresentations to medical providers about the terms of an ERISA plan—such as alleged misrepresentations regarding the rate the plan pays for certain medical services (e.g., the Medicare rate or the “Usual, Customary, and Reasonable” (“UCR”) rate in a geographic area).

The Ninth Circuit’s decision, impacting only ERISA healthcare plans facing state law negligent misrepresentation claims based on benefits verification calls by out-of-network medical providers, imposes a rare limitation on the scope of ERISA’s “famously expansive preemption clause.” The Court emphasized the need to anchor interpretations of ERISA’s preemption clause in its statutory language or the language courts have used to provide “workable standards” for determining its scope. In light of the Ninth Circuit’s opinion, ERISA health plan administrators should exercise care to ensure they are accurately conveying coverage terms to out-of-network providers during benefits verification calls, and plan sponsors should proactively monitor how their third-party administrators are responding to such inquiries.

Providers Pursue State Law Claims Because They Lack Recourse Under ERISA

ERISA grants plan participants and beneficiaries a right of action to challenge the denial of plan benefits. Because medical providers are not plan participants or beneficiaries, they lack direct standing to challenge an ERISA health plan’s alleged underpayment or nonpayment for medical services. They may instead achieve derivative standing to sue under ERISA for plan benefits by obtaining a valid assignment of rights from a plan participant or beneficiary, but many ERISA plans preclude this by including anti-assignment clauses in their plans. As a result, medical providers often turn to state law claims when they believe they have been underpaid by an ERISA plan for the services they rendered or have provided medical services to patients whom they later learn are not actually insured by the ERISA plan.

Because of ERISA preemption, a medical provider’s ability to bring state-law claims against an ERISA fiduciary (e.g., a plan administrator or sponsor) can depend on whether the provider is in- or out-of-network.  In-network providers are those who have entered into a “provider agreement” with the plan, agreeing to provide medical services to plan members at reduced rates in exchange for receiving an increased volume of business through the plan incentivizing members to see those providers. This arrangement enables in-network providers to bring breach of contract claims when the plan pays a different rate than the contract rate. Because these “provider agreements” operate separately from an ERISA plan’s terms, they provide a basis for suit independent of ERISA, allowing such plaintiffs to avoid ERISA preemption of their contract claims. Out-of-network providers, however, do not agree to provide medical services at specified contractual rates. For this reason, ERISA plans often establish a formula to determine rates for “out-of-network services” (e.g., a percentage of a defined “Maximum Allowed Amount” or “Eligible Expenses,” after accounting for the patient’s annual deductible and maximum out-of-pocket costs under the plan). Because there is no “provider agreement,” out-of-network providers have attempted to bring state-law claims, including breach of an oral or implied contract, promissory estoppel, quantum meruit, fraudulent inducement, conversion, and negligent misrepresentation, when payment disputes arise. But many courts have historically held that such claims are preempted by ERISA.

ERISA Preemption Often Bars State Law Claims by Out-of-Network Providers

ERISA Section 514(a) preempts “any and all State laws” that “relate to” a covered employee benefit plan. Courts construe this “clearly expansive” provision broadly.² In determining whether ERISA preempts a state-law claim, courts apply two separate tests to evaluate whether the claim “relates to” an ERISA plan: (1) whether the claim ”refers to” the plan (i.e., is premised on the plan’s existence or essential to the claim’s survival); or (2) whether it has an impermissible “connection with” the plan (i.e., governs a central matter of plan administration, interferes with nationally uniform plan administration, or bears upon an ERISA-regulated relationship, such as the relationship between a plan and plan member, a plan and employer, or an employer and employee).

When medical providers seek to recoup payment from an ERISA plan, they have historically asserted state law breach of contract, promissory estoppel, or negligent misrepresentation claims. But because these claims arise from the medical services provided to patients enrolled in ERISA plans, the defendants frequently invoke ERISA preemption as a defense.

In HAMOC, the patient participant received surgery from an out-of-network provider. Before performing the surgery, the medical provider alleged that it placed a benefits verification call to the plan’s administrator, which allegedly represented that the plan would reimburse the medical provider at the UCR rate for the cost of the surgery, and that payment would not be based on the Medicare Fee Schedule. In alleged reliance on those oral representations, the medical provider performed the surgery but was allegedly paid the lower Medicare rate (which amounted to approximately five percent of the charged services), rather than the UCR rate. The medical provider’s sub-assignee, Healthcare Ally Management of California, LLC (“HAMOC”), sued the plan administrator and the company sponsoring the plan, asserting claims for negligent misrepresentation and promissory estoppel under California law, and, in the alternative, an ERISA benefits claim.

The district court dismissed each claim. The court held that HAMOC lacked derivative standing to assert an ERISA benefits claim because it did not have a valid assignment of the patient’s right to ERISA benefits. The court also held that ERISA preempted both state law claims. In a pre-Bristol decision,³ the district court relied primarily on the Ninth Circuit’s decision in Wise v. Verizon Communications, Inc., 600 F.3d 1180 (9th Cir. 2010), applying the “refers to” test and explaining that HAMOC’s negligent misrepresentation and promissory estoppel claims “necessarily depend on the existence of an ERISA-covered plan,” resulting in preemption. The court reasoned that, as in Wise, HAMOC had “no basis to argue that it lost insurance benefits to which it was entitled” without the existence of an ERISA plan. The court did not separately analyze preemption under the “connection with” test.

Ninth Circuit Draws Line Between Preempted and Non-Preempted State Law Claims Against ERISA Plans

The Ninth Circuit panel’s decision in HAMOC builds on its other recent ERISA preemption decisions, most notably its 2024 decision in Bristol SL Holdings, Inc. v. Cigna Health & Life Ins. Co., 103 F.4th 597 (9th Cir. 2024) (“Bristol”). In Bristol, the Ninth Circuit held that ERISA preempted state law breach of contract and promissory estoppel claims brought by the successor in interest to an out-of-network drug rehabilitation facility that had placed calls to a plan administrator to confirm coverage and reimbursement rates for patients enrolled in ERISA plans. After years of reimbursing the rehabilitation facility, the plan administrator denied approximately $8.6 million in claims for 106 patients, based on its determination that the center had engaged in “fee-forgiving” (waiving patient co-pays and deductibles) in violation of express plan terms. Critically, the plan administrator did not know about the fee-forgiving practices when the coverage and reimbursement representations were made. The court held that the center’s oral contract theory, which sought to convert the plan administrator’s pre-treatment representations into binding agreements that would override the plan’s fee-forgiving provisions, was preempted under both the “reference to” and “connection with” tests because it attempted to supplant ERISA plan terms and would intrude on a central matter of plan administration. Because the plan’s representations were not false when made, but rather no longer applied after the fee-forgiving practices were discovered (which created a plan compliance issue), negligent misrepresentation was not a viable claim. Recognizing this, the Bristol court expressly reserved the question of whether a negligent misrepresentation claim arising from a provider’s benefits verification call would be preempted, the precise issue addressed by the HAMOC panel.

The Ninth Circuit panel in HAMOC makes clear that Bristol remains good law. Applying Bristol, it affirmed the district court’s dismissal of HAMOC’s promissory estoppel claim and held that, because the promissory estoppel claim was legally analogous to the claims the Court previously held were preempted in Bristol, the same preemption analysis controlled.

However, the Ninth Circuit panel reversed the dismissal of HAMOC’s negligent misrepresentation claim, finding it was not preempted by ERISA. The panel evaluated HAMOC’s claims under both the “connection with” and “refers to” preemption tests. Applying the “connection with” test, the panel held that HAMOC’s claim did not bear on an ERISA-regulated relationship because ERISA, which protects the interests of plan participants and beneficiaries, does not “comprehensively regulate” the relationship between an independent, out-of-network medical provider and an ERISA plan administrator. Applying the “reference to” test, the panel held that because the negligent misrepresentation claim arose from the alleged misrepresentation and not the denial of ERISA plan benefits, it did not hinge on the interpretation of the plan’s terms and therefore was not a claim Congress intended to route through ERISA’s civil enforcement scheme. In its discussion, the panel observed a “gap in ERISA’s enforcement system” for third-party providers, particularly where plan terms preclude members from assigning rights under the plan.

Following HAMOC, the question of whether ERISA preempts state law claims will continue to require a fact-specific analysis and a focus on the specific type of claims at issue (e.g., contract or tort). Within the Ninth Circuit, contract-based theories brought by in-network providers are generally not preempted because they arise from separate contractual agreements. But contract-based theories brought by out-of-network providers that seek to override or supplant ERISA plan terms are preempted because they interfere with plan administration. However, under HAMOC, tort-based claims (e.g., negligent misrepresentation) arising from pre-treatment verification calls are not preempted by ERISA because such a claim does not depend on the terms of the plan and the injury arises from the misrepresentation rather than the denial of plan benefits. In other words, HAMOC held that ERISA does not preempt negligent misrepresentation claims where the injury is the difference between what was actually paid to the provider versus what was represented would be paid—as that injury would exist regardless of whether the amount paid was consistent with the terms of the plan.

Takeaways for Plan Administrators and Sponsors

Health plan sponsors and their administrators should be aware that while ERISA preemption remains available as a defense against contract-based claims by out-of-network providers, HAMOC limits the scope of that defense as applied to tort-based claims in the Ninth Circuit. While they are still effective in many respects, plan sponsors should also recognize that anti-assignment clauses in ERISA plans may not bar all third-party claims, including state law tort claims brought by out-of-network providers.

It is worth noting that the HAMOC panel cautioned that it is “far from obvious” that HAMOC’s claim would succeed on the merits. On remand, HAMOC will need to prove what the provider specifically asked during the verification call, what the plan administrator represented, what the provider knew about the likely application of UCR or Medicare rates, and whether the plan sponsor or administrator intended to induce reliance. In light of this, plan administrators should review their call recording policies and whether their third-party administrators are recording benefit verification calls. Such recordings could provide dispositive evidence early in a case that undermines any claims of misrepresentation. Further, under California’s negligent misrepresentation standard, the Ninth Circuit noted that HAMOC must demonstrate that the plan administrator lacked a “reasonable ground for believing” the truth of its statements at the time they were made. Plan administrators should consider providing out-of-network providers with the applicable plan coverage terms with respect to the at-issue treatment, while warning that the provider should seek professional advice and make its own independent determination regarding the availability and extent of coverage. A plan administrator owes no fiduciary duty to provide guidance to an independent, third-party medical provider, and the provision of the plan coverage terms and disclaimers could defeat the medical provider’s justifiable reliance on alleged misrepresentations about plan terms, such as whether the UCR or another rate applies.

Thus, in the face of a marginally narrowed ERISA preemption landscape post-HAMOC, plan administrators and sponsors should evaluate their existing processes to determine how they can prevent and, if necessary, defeat future negligent misrepresentation claims based on benefits verification calls.

¹ Access Mediquip L.L.C. v. UnitedHealthcare Insurance Co., 662 F.3d 376 (5th Cir. 2011); In Home Health, Inc. v. Prudential Insurance Co. of America, 101 F.3d 600 (8th Cir. 1996); Lordmann Enterprises, Inc. v. Equicor, Inc., 32 F.3d 1529 (11th Cir. 1994).

² N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655 (1995).

³ In Bristol SL Holdings, Inc. v. Cigna Health & Life Ins. Co., 103 F.4th 597 (9th Cir. 2024) (“Bristol”), the Ninth Circuit held that ERISA preempted state law breach of contract and promissory estoppel claims arising from a benefits verification call by an out-of-network provider.